Even in the teeth of a recession, Mel Karmazin expects newly formed satellite radio company Sirius XM Radio Inc. to show a huge swing in profitability in the coming year.
Karmazin told investors at the Media and Money conference in New York on Tuesday that the company expects to go from negative $400 million Ebitda this year to $300 million in 2009.
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Much of the swing comes from the $425 million in savings and other benefits that Karmazin says the merger of Sirius Satellite Radio and XM Satellite Radio will produce. Sirius XM expects strong growth from its agreements with major car manufacturers. Even if the economic downturn hits the auto industry hard and there are 12 million cars sold this year, Sirius XM expects to add millions of new subscribers and hundreds of million in revenues.
Only Comcast Corp. has more subscribers, and only the recently privatized Clear Channel Communications Inc. is a bigger player in audio entertainment.
"We're growing very rapidly," Karmazin said, and Clear Channel "has other plans."
So why is Sirius XM trading at
50 cents a share, just slightly more than the 43 cents a day that its customers pay for commercial-free radio?
In today's market, Karmazin said, Wall Street is rewarding companies with a lot of cash flow and great balance sheets.
"That's not us today," Karmazin said at the conference, produced by Dow Jones & Co. and Nielsen Co.-
Chris Nolter
Comments
This effing guy makes more Kool-Aid than Jim Jones!